A private mortgage refers to a loan, secured by real property, provided by an individual or a private entity, rather than a traditional financial institution like a bank or credit union.
Here are some key features:
Lending Source
The lender can be a private individual, a group of investors, or a private lending company like a MIC (Mortgage Investment Corporation).
Terms and Conditions
Private mortgages often have more flexible terms compared to traditional mortgages. They can vary widely in interest rates, repayment schedules, and loan amounts. The lender will often adjust the terms and conditions of the loan to meet your needs.
Approval Process
The approval process is typically quicker and less stringent than that of traditional lenders. This can be beneficial for borrowers who might have difficulty obtaining a mortgage from banks due to poor credit, unique income sources (self-employed) or unconventional properties.
Higher Interest Rates
Private mortgages often come with higher interest rates to compensate for the increased risk the lender takes on.
Shorter Terms
These loans may have shorter terms, often ranging from a few months to a few years, and may be used as bridge financing. The typical terms are six months, one year, or occasionally two years.
Use Cases
Borrowers might use private mortgages for various reasons, including purchasing property quickly, refinancing existing debt, or accessing funds for investment purposes.
Regulations
While private mortgages are less regulated than traditional mortgages, lenders in Ontario must still comply with provincial laws regarding lending practices. Mortgage brokers and private lenders in Ontario are regulated by FSRA (Financial Services Regulatory Authority of Ontario) under the Mortgage Brokerages, Lenders and Administrators Act.
Summary
If you’re considering a private mortgage, it’s advisable to carefully review the terms & conditions of the loan and consult your real estate lawyer to understand the full implications of the contract prior to signing the Commitment.
Call or text Andy at: 289-400-3420 or email him at: <http://www.privatedaddy.com/?q=HWd2LD9JfA8QJhwwMFBNaWpTHQgpMXhFOQ-3D-3D_19>.